When beginning the process of purchasing a home, it’s important to understand the different roles that each organization plays.
We will focus on three organizations to answer the question, “does the VA lend money?” You need to understand what a mortgage broker is and does, what a lender does and how they work with a broker, and what Veterans Affairs (VA) does.
A mortgage broker is a company that specializes in preparing all the documents and helping the borrower through the process of getting approved and closing the loan. The broker’s primary concern is the borrower. They want to make sure you get approved at the best rate and as smoothly and quickly as possible.
A lender is the bank, and your broker will find you the best lender for your particular situation. They’ll get you one with the highest probability of approving your loan at the lowest rate. The lender you ultimately end up using will be your source of money so that you can buy the home.
The VA does not lend money - that’s the lenders job. The VA is there to give your lender some peace of mind. They do this by insuring a portion of the loan amount. This fiscal guaranty gives your lender confidence to require no-down-payment from you, and to offer you some of the most competitive rates and terms.
So there you have it, the VA does not lend money, they guarantee money to your lender in case something bad happens.
If you’d like more information of this, feel free to reach out to us. We’re eager to help you out. Call 1.800.920.5420 to speak to a live loan specialist.
There will not be a Week in Review video this week but our hope is that this post will help make up for the missing video. Rest assured, Creekside Mortgage, Inc. will have a video post next week for your viewing pleasure.
Mortgage rates have risen to 3 month highs due to the holiday season and bond market weakness but higher rates in December is nothing new. Typically rates do rise a little in December however VA and FHA rates are still low and very competitive.
One advantage of the winter and higher rates is that it is a good time to start looking for a house. Summer is when most homes are shown, with lawns freshly mown, windows open to see majestic views, shade trees and lots of flowers. Then comes winter, winter lets the buyer see the home in its worst state. If the home still looks appealing without the leaves and flowers, chances are you might like it in the summer too. Also, sellers who put their homes up for sale spend more time making the inside of the home appealing giving you a chance to see the home as it would look for the holidays.
Another advantage of winter is that lenders are less busy so your loan could process faster, giving you time to take advantage of winter sales on appliances and hardware specials.
We’re experiencing the normal calm that happens before the storm, and it’s about to break loose. The Federal Reserve will be making an announcement Wednesday, and is expected to discuss (again) the plan to pull out of the bond market.
If they announce or even hint that they may start to pull out before the before March, rates will likely go up. But if the announcement is more along the lines of needing to wait longer, then it’s likely that rates will improve slightly.
With all the hype surrounding the interest rates and what the market is going to be doing, it’s important to approach it all levelheaded. You can waste so much time and energy trying to pick the best time to lock a loan, but the reality is that just doing it is where the real return on investment happens.
You’ll frustrate yourself to no end if you try to pick “the bottom” on interest rates. They are a moving target, and your best bet is to treat it like the stock market. Jump on the rate when it looks “good enough”. Waiting could cause you to miss your opportunity and you’ll end up trying to buy a home at rates comparable to the 1990’s!
That beautiful house just down the street, it’s the one you drive by and think to yourself, “If I had that house I would have a huge garden, swings for the kids and a garage to finally work on my bike.” Well, it just went on the market. There is a big, bright for sale sign in the front and on a whim you call the number for the asking price. Surprised at the price you begin to wonder if you could own it and think “Where do I start?”
Many people have driven by a house and wondered, “What if...” and that dream has been the motivation that pushed them into owning their own home. Most new home buyers start this way but don’t know where to start when they decide they are ready to own a home.
The best way to start shopping for a home is to first find out what you can afford and what program works best for you.
The conventional home loan is an option if you are able to afford a down payment of ten to thirty percent of the price. Generally twenty percent or more will exclude the buyer from paying mortgage insurance. Less than twenty percent, and the buyer will be required to pay a pretty hefty mortgage insurance.
Just what is mortgage insurance you may ask? Mortgage insurance is a policy that will compensate a lender in the case a loan goes into default. In other words, if the buyer is unable to pay the loan, then the lender can get compensation back from the insurance.
If you're a veteran, the best option would be to use your VA home loan guarantee. This is our preferred loan option because it has the best interest rates with the lowest amount of upfront costs.
The VA loan is a government backed loan program designed to ease the burden of purchasing a home for military veterans. The VA does not actually lend the money, it simply guarantees the loan for the lender. This allows lenders to give our veterans a chance to own their own home without having to pay a down payment or pay mortgage insurance - a huge savings!
Of course if you are not a veteran then you still have other options. The FHA loan is another Federal Government program that helps by lowering the down payment for a home to as low as three and a half percent. The mortgage insurance still applies though. The benefit is that the buyer can still make a purchase if all they can afford is three and a half percent.
There you have it! Three loan types, now all you have to do is contact us and we will help you find the best program for your individual situation.
The loan process is very simple. Either call or stop by as you will always find a real person to speak with and fill out an application. Your loan officer will then ask for things like work history, bank statements, income statements and look into your credit history. This is to ensure you get the best loan possible. After all, you just might be able to afford that cute little home down the street after all.
Whether you’re aware of it or not, Christmas is quickly approaching! Based on the relatively limited number of Christmas cards I’ve received this year, I’d say the season has snuck up on a lot of people. That or my family made it on far fewer people’s “nice lists”.
We love this time of year around the office. We put up decorations and we band together in community outreach efforts that are sponsored by the company.
It’s amazing the joy you get when you extend a hand of help to people around you who are struggling. We recently donated some Christmas trees to families in our community. One of the fathers called me to thank us for helping. His gratitude was touching as he talked about watching his kids decorate a tree they thought they’d have to go without this year.
Next on our office calendar is ringing the bell for the Salvation Army. We’re going to take turns at the local Safeway. This will be the first time that our office tries this, so we hope it goes well.
We hope you have a wonderful Christmas season!
Getting a VA loan can be a complicated process, and there are a lot of resources out there giving advice on what you should do to simplify the process. But what about the things you shouldn’t do?
During the process of buying a home using the VA benefit, there are many pitfalls that are relatively easy to avoid if you know what you’re looking for. Here are a few things you shouldn’t do.
Use your typical lender
Using your typical lender is one of the major pitfalls that cause a lot of headache for many Veterans buying a home using the VA loan program.
We have helped numerous Veterans who had issues working with lenders whose main focus are conventional loans. The buyer usually hits some type of a roadblock and the inexperienced lender doesn’t know how to handle it and so they get denied. An experienced VA focused lender can quickly overcome such challenges.
Use your typical real estate agent
The VA loan has guidelines and rules that can cause some issues if the realtor is not experienced with the VA loan program. For example there are Minimum Property Requirements or MPRs. If your real estate agent is familiar with these standards, he/she can spot them before you try to make an offer.
There are also rules about closing costs that can save you tons of money, but if your realtor is not aware of these rules, your loan could be declined by the VA.
Buy whatever house you’d like
While it would be nice to buy whatever house makes you feel good, the VA has the Minimum Property Requirements as mentioned above. Things like type of paint, driveway material, and pests can cause a VA loan to get declined.
Make sure that you work closely with your experienced VA lender to make sure that you don’t have any MPR problems.
As a Veteran focussed mortgage company, we’ve experienced many of these problems firsthand and can guide you through the process of buying a home using the VA home loan program. We typically close VA loans in about 25 days and have the experience to make the process go as smoothly as possible.
By Joe Kuziel
With so many organizations claiming to assist veterans, I wondered how much they actually helped. I soon found that my skepticism was, in fact, warranted. My struggle was not in finding just any job, but in finding a career that was both rewarding and challenging. As a United States Navy veteran who had served in Operations Enduring Freedom and Iraqi Freedom, I used my GI Bill to graduate with a Chemistry degree from the University of North Carolina Wilmington and began my career search. Why was I skeptical of veteran’s assistance programs and organizations? It was in my initial job search and in one of my first interviews that I developed a negative attitude towards so called “assistance”. My interview, while I thought I did well and was even told as much, left little comfort when the harsh reality set in. The hiring manager who scheduled the interview informed me that I had been given the interview for an entry level Chemist position only because of my veteran’s preference, but that the position would be given to another applicant who had more education and was willing to take a pay cut. I wondered why give me a phone interview and then let me drive six hundred miles only to be told a decision had been made before my interview?
After that awful experience, I began an eager search for Veteran assistance. I scoured the web only to find myself lost in endless links to other websites offering job assistance that only led to another link to a mega site where everyone posts jobs. Or worse yet, sites where jobs had been posted but not updated in years. I avoided trying to navigate through the mess by returning to the university website where they had legitimate job postings.
Eventually, I did find a career and began to start a family. Life had other plans for me though. After losing everything in a divorce, I found myself having to start over from scratch. The first thing to do was find gainful employment and I needed help fast. Since I wanted to avoid the tangled web of click here for assistance websites, I walked right into the Veterans of Foreign Wars Post 7824. I quickly began networking with people who shared common experiences with me. Combat vets seem to be able spot other combat vets and that is how I was introduced to Robin Conrad of Century 21 Realty. Robin then introduced me to Creekside Mortgage, Inc a veteran owned and locally operated small business.
There was no filing out long applications, spending hours taking online personality tests, or submitting documents to a faceless human resource department. The process was simply word of mouth and an interview.
Finally, I had a job with the opportunity of turning it into a career. Everyone at Creekside Mortgage has some tie to military service as either a former service member, spouse, or have family serving. What makes it such a unique place to work is the family like atmosphere. The whole office works as a team. While each person has a specific position we all take ownership and help each other out.
My biggest learning experience with Creekside Mortgage was finding out how easy it is to buy a home and yet how confusing the process can be if you don’t know where to start. Like my job search, navigating websites that claim to have answers can be a daunting task. Educating veterans in how to use their benefits has become my primary responsibility. Each person has a different situation and as such each has questions that are based on their circumstances. Many veterans have been surprised to find they qualify for a VA loan or that the current economic situation is perfect for buying a home.
As veterans it is our responsibility to help each other out. That’s why I want to pay it forward by being a tangible resource. When a veteran contacts me, they will receive an answer, not a faceless web link to nowhere.